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Tobin's Q ratio


Definition

A ratio in Tobin's Q theory which compares the market value of a company and the value of the company's assets. A ratio of 1 indicates that the market value of the company is based solely on its assets, a ratio less than 1 indicates a market value less than the value of the company's assets, and a ratio greater than 1 indicates a market value greater than the company's assets.


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